Krispy Kreme is doubling down on its core business.
The doughnut giant said it is exploring strategic alternatives for Insomnia Cookies, including considering an all-cash sale. Krispy Kreme acquired a majority stake in the cookie brand in 2018.
“We acquired a majority stake in Insomnia Cookies to build our e-commerce and digital capability as well as assist Insomnia’s U.S. and International expansion, said Mike Tattersfield, who is set to step down as Krispy Kreme CEO in January. "Both efforts have been successful and it’s time for the next strategic step for both companies.”
Krispy Kreme said its decision enables the company to unlock shareholder value and focus on its core strategy of producing, selling and distributing fresh doughnuts. Krispy Kreme, which went public in 2021, is now available in 37 countries, selling through nearly 13,000 points of access. Looking ahead, the company plans to expand to more than 75,000 points by entering three-to-five new countries each year and developing new channels like quick service restaurants.
Insomnia Cookies, which is known for serving warm cookies all day and late into the night, has rapidly grown since the 2018 acquisition, operating in three countries with over 250 locations. The brand is expected to generate revenues of approximately $230 million in fiscal year 2023. 45% of its revenue is generated digitally.
“It has been an honor to partner with Krispy Kreme in an unprecedented chapter of growth for Insomnia Cookies,” said Insomnia founder and CEO Seth Berkowitz. “As we enter our 20th year of delivering warm, delicious cookies, we are now a sizeable multi-channel enterprise but still have a huge runway ahead in the attractive $700 billion indulgence industry. I look forward to leading our Insomniacs in our next phase of significant domestic and global expansion.”
Krispy Kreme has hired Evercore and Morgan Stanley & Co. LLC to act as financial advisors.
Based in Charlotte, N.C., Krispy Kreme has delivered four consecutive quarters of double-digit organic revenue growth while expanding its global reach. The company is also reaffirming full year 2023 guidance and continues to trend toward the middle to the higher end of the revenue and adjusted EBITDA ranges.